MoreMOreMORE fromfrom from QwertyQWERTY QWERTY at KAT.PH at at KAT.PH KAT.PH christensen gregersen dyer (Continued from front flap) ManageMent uS$29.95 “ Businesses worldwide have been guided and influenced by The Innovator’s Dilemma and Are you The Innovator’s Solution. Now The Innovator’s DNA shows where it all starts. This book the next gives you the fundamental building blocks for becoming more innovative and changing Jeff Dyer is the Horace the world. One of the most important books to come out this year, and one that will Steve JobS? Beesley Professor of Strategy at remain pivotal reading for years to come.” the Marriott School, Brigham —mArC benioff, Chairman and CEO, salesforce.com; author, Behind the Cloud You can be as innovative and impactful— Young University. He is widely if you can change your behaviors to improve published in strategy and your creative impact. business journals and was the “ The Innovator’s DNA is the ‘how to’ manual to innovation, and to the fresh thinking that the innov In The Innovator’s DNA, authors Jeff Dyer, fourth most cited management scholar from is the root of innovation. It has dozens of simple tricks that any person and any team Hal Gregersen, and bestselling author Clayton 1996–2006. can use today to discover the new ideas that solve the important problems. Buy it now M. Christensen (The Innovator’s Dilemma, The and read it tonight. Tomorrow you will learn more, create more, inspire more.” Innovator’s Solution) build on what we know hAl GreGerSen is a —SCott D. Cook, Chairman of the Executive Committee, Intuit Inc. about disruptive innovation to show how professor of leadership individuals can develop the skills necessary to at INSEAD. He consults “ The Innovator’s DNA sheds new light on the once-mysterious art of innovation by move progressively from idea to impact. to organizations around By identifying behaviors of the world’s the world on innovation, showing that successful innovators exhibit common behavioral habits—habits that can boost anyone’s creative capacity.” best innovators—from leaders at Amazon globalization, and and Apple to those at Google, Skype, and —Stephen r. Covey, author, The 7 Habits of Highly Effective People and transformation and has published extensively Virgin Group—the authors outline five The Leader in Me A in leading academic and business journals. discovery skills that distinguish innovative tor’ entrepreneurs and executives from ordinary ClAyton m. ChriStenSen “ Having worked with Clayton Christensen on innovation for over a decade, I can see managers: Associating, Questioning, Observing, is the Robert and Jane that The Innovator’s DNA continues to stretch our thinking with insights that challenge Networking, and Experimenting. Cizik Professor of Business convention and enable progress in the important cause of innovation . so critical to Once you master these competencies Administration at Harvard competitiveness and growth.” S (the authors provide a self assessment for Business School and the —A.G. lAfley, retired Chairman of the Board and CEO, rating your own innovator’s DNA), the architect of and the world’s The Procter & Gamble Company D authors explain how you can generate ideas, foremost authority on disruptive innovation. n collaborate with colleagues to implement them, and build innovation skills throughout your A organization to sharpen its competitive edge. to learn More, Visit: innovAtorSDnA.Com Also by Clayton M. Christensen: That innovation advantage can translate into a premium in your company’s stock price—an innovation premium—that is possible only by building the code for innovation right into your organization’s people, processes, and guiding philosophies. Practical and provocative, The Innovator’s jacket design: faceout studio author photos: Mark philbrick; kenneth linge; stuart cahill DNA is an essential resource for individuals ISBN 978-1-4221-3481-8 90000 and teams who want to strengthen their get inspired. innovative prowess. stay inforMed. join the discussion. Bestselling Author of The Innovator’s Dilemma Visit www.hbr.orG/bookS www.hbr.orG/bookS 9781 42213481 8 (Continued on back flap) 100092 00 i-vi r1 rr.qxp 5/13/11 6:52 PM Page i QWERTY at KAT.PH THE INNOVATOR’S DNA 100092 00 i-vi r1 rr.qxp 5/13/11 6:52 PM Page ii 100092 00 i-vi r1 rr.qxp 5/13/11 6:52 PM Page iii THE INNOVATOR’S DNA MASTERING THE FIVE SKILLS OF DISRUPTIVE INNOVATORS Jeff Dyer Hal Gregersen Clayton M. Christensen HARVARD BUSINESS REVIEW PRESS BOSTON, MASSACHUSETTS 100092 00 i-vi r1 rr.qxp 5/13/11 6:52 PM Page iv Copyright 2011 Jeff Dyer, Hal Gregersen, and Clayton M. Christensen All rights reserved Printed in the United States of America 10987654321 No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to [email protected], or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163. Library of Congress Cataloging-in-Publication Data Dyer, Jeff. The innovator’s DNA : mastering the five skills of disruptive innovators/ Jeff Dyer, Hal Gregersen, Clayton M. Christensen. p. cm. ISBN 978-1-4221-3481-8 (hardback) 1. Creative ability in business. 2. Technological innovations. 3. Entrepreneurship. I. Gregersen, Hal B., 1958– II. Christensen, Clayton M. III. Title. HD53.D94 2011 658.4'063—dc22 2011008440 The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Publications and Documents in Libraries and Archives Z39.48-1992. 100092 00 i-vi r1 rr.qxp 5/13/11 6:52 PM Page v Contents Introduction 1 Part One Disruptive Innovation Starts with You 1 The DNA of Disruptive Innovators 17 2 Discovery Skill #1 41 Associating 3 Discovery Skill #2 65 Questioning 4 Discovery Skill #3 89 Observing 5 Discovery Skill #4 113 Networking 6 Discovery Skill #5 133 Experimenting Part Two The DNA of Disruptive Organizations and Teams 7 The DNA of the World’s Most Innovative Companies 157 100092 00 i-vi r1 rr.qxp 5/13/11 6:52 PM Page vi vi CONTENTS 8 Putting the Innovator’s DNA into Practice 175 People 9 Putting the Innovator’s DNA into Practice 193 Processes 10 Putting the Innovator’s DNA into Practice 215 Philosophies Conclusion: Act Different, Think Different, Make a Difference 235 Appendix A: Sample of Innovators Interviewed 241 Appendix B: The Innovator’s DNA Research Methods 245 Appendix C: Developing Discovery Skills 249 Notes 261 Index 269 Acknowledgments 283 About the Authors 295 100092 00a 001-014 INT r1 go.qxp 5/13/11 9:53 AM Page 1 Introduction NNOVATION. It’s the lifeblood of our global econ- Iomy and a strategic priority for virtually every CEO around the world. In fact, a recent IBM poll of fifteen hun- dred CEOs identified creativity as the number-one “leadership competency” of the future.1 The power of innovative ideas to rev- olutionize industries and generate wealth is evident from history: Apple iPod outplays Sony Walkman, Starbucks’s beans and atmosphere drown traditional coffee shops, Skype uses a strategy of “free” to beat AT&T and British Telecom, eBay crushes classi- fied ads, and Southwest Airlines flies under the radar of American and Delta. In every case, the creative ideas of innovative entrepre- neurs produced powerful competitive advantages and tremen- dous wealth for the pioneering company. Of course, the retrospective $1 million question is, how did they do it? And per- haps the prospective $10 million question is, how could I do it? The Innovator’s DNA tackles these fundamental questions— and more. The genesis of this book centered on the question that we posed years ago to “disruptive technologies” guru and coau- thor Clayton Christensen: where do disruptive business models come from? Christensen’s best-selling books, The Innovator’s 1 100092 00a 001-014 INT r1 go.qxp 5/13/11 9:53 AM Page 2 2 INTRODUCTION Dilemma and The Innovator’s Solution, conveyed important in- sight into the characteristics of disruptive technologies, business models, and companies. The Innovator’s DNA emerged from an eight-year collaborative study in which we sought a richer under- standing of disruptive innovators—who they are and the innova- tive companies they create. Our project’s primary purpose was to uncover the origins of innovative—and often disruptive— business ideas. So we interviewed nearly a hundred inventors of revolutionary products and services, as well as founders and CEOs of game-changing companies built on innovative busi- ness ideas. These were people such as eBay’s Pierre Omidyar, Amazon’s Jeff Bezos, Research In Motion’s Mike Lazaridis, and Salesforce.com’s Marc Benioff. For a full list of innovators we interviewed whom we quote in this book, see appendix A; virtually all of the innovators we quote, with the exception of Steve Jobs (Apple), Richard Branson (Virgin), and Howard Schultz (Starbucks)—who have written autobiographies or have given numerous interviews about innovation—are from our interviews. We also studied CEOs who ignited innovation in existing companies, such as Procter & Gamble’s A. G. Lafley, eBay’s Meg Whitman, and Bain & Company’s Orit Gadiesh. Some entrepre- neurs’ companies that we studied were successful and well known; some were not (for example, Movie Mouth, Cow-Pie Clocks, Terra Nova BioSystems). But all offered a surprising and unique value proposition relative to incumbents. For example, each of- fered new or different features, pricing, convenience, or customiz- ability compared to their competition. Our goal was less to investigate the companies’ strategies than it was to dig into the thinking of the innovators themselves.